Small business VAT exemption scheme

What does the small business VAT exemption scheme involve?

The VAT exemption scheme for small businesses - the ‘small business VAT exemption scheme’ (kleine ondernemingsregeling) – gives a company or self-employed person an exemption from VAT. They can then sell goods or provide services without charging VAT. The condition for this scheme is an annual turnover of no more than € 25.000,- excluding VAT. Some activities fall outside this scheme, such as work in the construction sector like tiling, painting, roofing, plumbing and others. Those who do fall under this scheme may not charge VAT, but may not deduct VAT charged by suppliers on purchases either.

Invoices from self-employed people and companies under the small business VAT exemption scheme must state "Special exemption scheme for small businesses”.

VAT-liable or not?

Such a small business remains VAT-liable and must therefore have a VAT number, but does not have to submit periodic VAT returns or an annual customer listing. Note that the word ‘exemption’ on the invoice is not a free pass for sloppy administration, because just like a regular business or self-employed person, someone who is ‘VAT-exempt’ must also follow a number of rules such as issuing invoices and keeping them for the applicable periods, keeping a receipts journal, etc.

Someone who is exempt may of course not charge VAT to customers. The flip side of the coin is that these self-employed people and companies may not deduct the VAT on the invoices they receive. You also remain liable for VAT. So you must have a VAT number and follow a number of formalities, such as submitting the annual customer listing.

Annual customer listing via Intervat

The customer listing is a list of the Belgian VAT numbers of the customers to whom a VAT-registered person supplied goods or provided services during the previous calendar year. The list only includes customers who generated more than € 250,- in turnover (excl. VAT). Those who fall under the small business VAT exemption scheme must also submit such a customer listing, unless it is a nil listing, which is the case when:

• none of the customers invoiced has a Belgian VAT number, OR
• the customers who do have a Belgian VAT number did not exceed the maximum annual turnover of € 250,- excluding VAT.

In Belgium, you can submit the customer listing easily online, via Intervat.

Need help? Contact the VAT office

If you are not entirely sure whether your business falls under the small business scheme, be sure to contact the competent VAT office. Incorrect use of a particular VAT exemption can result in fines. So find out carefully which VAT scheme applies to your activity as a self-employed person or business. Otherwise, a well-intentioned mistake can turn out to be costly.